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Madoff Trustee's Lawsuit Against Sonja Kohn

Madoff Trustee's Lawsuit Against Sonja Kohn

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Published by: DealBook on Dec 10, 2010
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07/10/2013

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44. On December 12, 2008, the Honorable Louis L. Stanton of the District

Court entered an order appointing Lee S. Richards, Esq. as receiver for the assets of

BLMIS (the “Receiver”).

45. On December 15, 2008, under SIPA § 78eee(a)(4)(B), SIPC filed an

application in the District Court alleging that, among other things, BLMIS was not able to

meet its obligations to securities customers as they came due and, accordingly, its

customers needed the protections afforded by SIPA. On that same date, under SIPA §

78eee(a)(4)(A), the SEC consented to a combination of its own action with SIPC’s

application.

46. Also on December 15, 2008, Judge Stanton granted the SIPC application

and entered an order under SIPA (the “Protective Decree”) which, in pertinent part:

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a.

appointed the Trustee for the liquidation of the business of BLMIS
under SIPA § 78eee(b)(3);

b.

appointed Baker & Hostetler LLP as counsel to the Trustee under
SIPA § 78eee(b)(3);

c.

removed the case to this Bankruptcy Court under SIPA §
78eee(b)(4); and

d.

removed the Receiver for BLMIS.

47. By orders dated December 23, 2008 and February 4, 2009, respectively,

the Bankruptcy Court approved the Trustee’s bond and found that the Trustee was a

disinterested person. Accordingly, the Trustee is duly qualified to serve and act on behalf

of the estate of BLMIS.

48. At a plea hearing (the “Plea Hearing”) on Mar. 12, 2009, in the case

captioned United States v. Madoff, No. 09-CR-213 (DC) (S.D.N.Y. March 12, 2009)

(Docket No. 50), Madoff pled guilty to an eleven-count criminal information filed against

him by the United States Attorney’s Office for the Southern District of New York. At the

Plea Hearing, Madoff admitted that he “operated a Ponzi scheme through the investment

advisory side of [BLMIS].” Additionally, Madoff asserted “[a]s I engaged in my fraud, I

knew what I was doing [was] wrong, indeed criminal.” Id. at 23. On June 29, 2009,

Madoff was sentenced to 150 years in prison, the maximum possible sentence for his

crimes. Madoff began serving his sentence at a federal penitentiary in Butner, North

Carolina on July 14, 2009.

49. On August 11, 2009, a former BLMIS employee, Frank DiPascali, pled

guilty to participating in and conspiring to perpetuate the Ponzi scheme. At a plea

hearing on August 11, 2009 in the case entitled United States v. DiPascali, No. 09-CR-

764 (RJS) (S.D.N.Y. Aug. 11, 2009) (Docket No. 11), DiPascali pled guilty to a ten-

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count criminal information. Among other things, DiPascali admitted that Madoff had

been operating a Ponzi scheme since at least the 1990s. Id. at 46.

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